Beebe: If Private Option Dropped, Revenue Must Be Replaced

Governor Mike Beebe told a statewide television audience Thursday night the legislature will leave an $86-million "hole in the budget" if it reverses course from last year and ends the private option for the expansion of Medicaid under the federal Affordable Care Act.

The funding for the private option must be re-appropriated each year. Lawmakers are expected to decide its fate in the fiscal session now underway at the capitol.

Beebe said on AETN's Arkansans Ask that the private option--a unique idea when he won approval from the U.S. Dept. of Health and Human Services--has become a trend-setting concept that other states have followed.

He said a tax cut set to take effect on July 1 in Arkansas was based on the extra revenue flowing into the state with the increase in Medicaid, and if lawmakers decide not to accept those federal dollars, they'll have to decide how to make up for the shortfall.

Beebe likened dumping the private option to turning down federal highway dollars after charging an 18-cents-a-gallon tax on gasoline. "That's why all these Republican states that didn't want to do this originally are now trying to do what Arkansas did," Beebe told AETN host Steve Barnes.

He said it would also trigger a federal tax on small businesses in Arkansas of an estimated $38-million if Medicaid is not expanded.

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The Arkansas Department of Human Services says a significant number of younger adults are enrolling in the state’s private option. It allows people earning up to 138 percent of the federal poverty level ($15,850 for an individual) to receive subsidized private health coverage using federal money devoted to Medicaid. Andy Allison, state Medicaid director, says its no surprise younger people are qualifying for the private option, since they tend to earn less.

The director of the Arkansas Department of Human Services says he doesn't have an alternative budget if lawmakers block funding for the state's "private option" version of Medicaid expansion in the February fiscal session.